8-KFinancial Events

SEMPRA 8-K Report, Financial Obligation (Nov 25, 2005)

Filed November 25, 2005For Securities:SRESREA

Summary

This 8-K filing by Sempra Energy (SRE) on November 24, 2005, reports on a new Three-Year Revolving Credit Agreement entered into by its subsidiary, Sempra Global, on November 18, 2005. This agreement provides Sempra Global with access to up to $650 million in revolving credit, with an expected increase to $750 million soon. The facility also allows for the issuance of up to $300 million in letters of credit. This new credit facility is secured by a guarantee from Sempra Energy and is subject to certain financial covenants, including maintaining a total indebtedness to total capitalization ratio of no more than 65%. The company intends for this facility to supplement its existing $2.5 billion Five-Year Revolving Credit Agreement, indicating a proactive approach to managing its liquidity and financial flexibility.

Key Highlights

  • 1Sempra Global, a subsidiary of Sempra Energy, entered into a new Three-Year Revolving Credit Agreement on November 18, 2005.
  • 2The credit facility has an initial borrowing capacity of $650 million, with plans to increase it to $750 million.
  • 3The agreement permits the issuance of up to $300 million in letters of credit.
  • 4Sempra Energy provides a guarantee for Sempra Global's obligations under this credit facility.
  • 5Borrowings under the facility are subject to variable interest rates tied to benchmark rates and Sempra Energy's credit ratings.
  • 6A key financial covenant requires Sempra Energy to maintain a total indebtedness to total capitalization ratio of no more than 65%.
  • 7This new facility is in addition to Sempra Global's existing $2.5 billion Five-Year Revolving Credit Agreement.

Frequently Asked Questions

The new Three-Year Revolving Credit Agreement provides Sempra Global, a subsidiary of Sempra Energy, with additional financial flexibility and liquidity. It allows for revolving credit borrowings and the issuance of letters of credit, supplementing existing credit arrangements.

Initially, Sempra Global can borrow up to $650 million under this facility. The company expects this amount to be increased to $750 million soon. Additionally, up to $300 million in letters of credit can be issued, which would reduce the available borrowing capacity.

Yes, Sempra Energy guarantees the obligations under the facility. A significant financial covenant requires Sempra Energy to maintain a ratio of total indebtedness to total capitalization of no more than 65% at the end of each quarter.

This new Three-Year Revolving Credit Agreement is in addition to Sempra Global's previously established $2.5 billion Five-Year Revolving Credit Agreement, which expires in August 2010. This indicates Sempra is diversifying and ensuring ample access to credit.